Strategies to Reduce Occupational Fraud in Small Restaurants
DOI:
https://doi.org/10.18034/gdeb.v11i1.620Keywords:
Occupational Fraud, Restaurants, Small Businesses, Business RiskAbstract
Occupational fraud is a growing business risk that is causing greater financial losses in small businesses than large businesses. Business owners lose approximately 5% of their revenues due to occupational fraud. The purpose of this multiple case study was to explore the strategies used by some business owners of small restaurants to reduce occupational fraud. The fraud triangle theory was the conceptual framework for this study. Three small restaurant owners from Puerto Rico participated in face-to-face, semi-structured interviews to reveal their successful strategies to minimize fraud. The data collection process also included business documents and researcher observations that assisted in establishing methodological triangulation. Using Yin’s 5-step process, data were coded and analyzed to identify emergent themes. The primary emergent themes obtained from data analysis revealed that owner monitoring, analytical procedures, and segregation of duties are effective strategies to minimize employee fraud. Participants revealed that implementing these strategies may reduce organizational losses associated with the fraud. The findings of this study may contribute to social change by reducing fraud activities, business failures, unemployment level, and criminality rate while promoting trust between community members and their institutions.
Metrics
Downloads
References
Ahmed, A. A. A., Aljarbouh, A., Donepudi, P. K., & Choi, M. S. (2021). Detecting Fake News using Machine Learning: A Systematic Literature Review. Psychology and Education, 58(1), 1932–1939. https://doi.org/10.17762/pae.v58i1.1046
Andon, P., Free, C., & Scard, B. (2015). Pathways to accountant fraud: Australian evidence and analysis. Accounting Research Journal, 28(1), 10–44. https://doi.org/10.1108/arj-06-2014-0058
Association of Certified Fraud Examiners. (2014). Report to the nations on occupational fraud and abuse. Retrieved from http://www.acfe.com/rttn/docs/2014-report-to-nations.pdf
Bailey, L. F. (2014). The origin and success of qualitative research. International Journal of Market Research, 56, 167–184. https://doi.org/10.2501/ijmr-2014-013
Berger, R. (2015). Now I see it, now I don’t: Researcher’s position and reflexivity in qualitative research. Qualitative Research, 15, 219–234. https://doi.org/10.1177/146879411246847
Bernard, H. R., Wutich, A., & Ryan, G. W. (2016). Analyzing qualitative data: Systematic approaches (2nd ed.). Thousand Oaks, CA: Sage.
Bonny, P., Goode, S., & Lacey, D. (2015). Revisiting employee fraud: Gender, investigation outcomes and offender motivation. Journal of Financial Crime, 22, 447–467. https://doi.org/10.1108/JFC-04-2014-0018
Borrego, M., Foster, M. J., & Froyd, J. E. (2014). Systematic literature reviews in engineering education and other developing interdisciplinary fields. Journal of Engineering Education, 103(1), 45–76. https://doi.org/10.1002/jee.20038
Boyle, D. M., DeZoort, F. T., & Hermanson, D. R. (2015). The effect of alternative fraud model use on auditors’ fraud risk judgments. Journal of Accounting and Public Policy, 34, 578–596. https://doi.org/10.1016/j.jaccpubpol.2015.05.006
Button, M., Blackbourn, D., Lewis, C., & Shepherd, D. (2015). Uncovering the hidden cost of staff fraud: An assessment of 45 cases in the UK. Journal of Financial Crime, 22, 170–183. https://doi.org/10.1108/jfc-11-2013-0070
Carter, N., Bryant-Lukosius, D., DiCenso, A., Blythe, J., & Neville, A. J. (2014). The use of triangulation in qualitative research. Oncology Nursing Forum, 41, 545–547. https://doi.org/10.1188/14.ONF.545-547
Chen, J., Cumming, D., Hou, W., & Lee, E. (2014). Does the external monitoring effect of financial analysts deter corporate fraud in China? Journal of Business Ethics, 134, 727–742. https://doi.org/10.1007/s10551-014-2393-3
Cressey, D. R. (1986). Why managers commit fraud. Australian & New Zealand Journal of Criminology, 19, 195–209. https://doi.org/10.1177/000486588601900402
Crocker, T., Besterman-Dahan, K., Himmelgreen, D., Castañeda, H., Gwede, C. K., & Kumar, N. (2014). Use of semistructured interviews to explore competing demands in a prostate cancer prevention intervention clinical trial. The Qualitative Report, 19(1), 1–16.
Dasgupta, M. (2015). Exploring the relevance of case study research. Vision: The Journal of Business Perspective, 19, 147–160. https://doi.org/10.1177/0972262915575661
Ding, S., Qu, B., & Wu, Z. (2015). Family control, socioemotional wealth, and governance environment: The case of bribes. Journal of Business Ethics, 136, 639–654. https://doi.org/10.1007/s10551-015-2538-z
Frazer, L. (2012). The effect of internal control on the operating activities of small restaurants. Journal of Business & Economics Research, 10, 361–374. https://doi.org/10.19030/jber.v10i6.7027
Fusch, P. I., & Ness, L. R. (2015). Are we there yet? Data saturation in qualitative research. The Qualitative Report, 20, 1408–1416.
Gao, J., Greenberg, R., & Wong-On-Wing, B. (2015). Whistleblowing intentions of lower-level employees: The effect of reporting channel, bystanders, and wrongdoer power status. Journal of Business Ethics, 126(1), 85–99. https://doi.org/10.1007/s10551-013-2008-4
Gilmore-Allen, A. (2015). Tech fraud and the small business. Internal Auditor, 72(1), 20–21.
Glodstein, D. (2015). Occupational fraud: Misappropriation of assets by an employee. Journal of the International Academy for Case Studies, 21(6), 125–129.
Gullkvist, B., & Jokipii, A. (2013). Perceived importance of red flags across fraud types. Critical Perspectives on Accounting, 24(1), 44–61. https://doi.org/10.1016/j.cpa.2012.01.004
Halbouni, S. S., Obeid, N., & Garbou, A. (2016). Corporate governance and information technology in fraud prevention and detection. Managerial Auditing Journal, 31, 589–628. https://doi.org/10.1108/MAJ-02-2015-1163
Hess, M. F., & Cottrell, J. H. (2016). Fraud risk management: A small business perspective. Business Horizons, 59(1), 13–18. https://doi.org/10.1016/j.bushor.2015.09.005
Hussain, S., Ahmed, A. A. A., Kurniullah, A. Z., Ramirez-Asis, E., Al-Awawdeh, N., Al-Shamayleh, N. J. M., Julca-Guerrero, F. (2021). Protection against Letters of Credit Fraud. Journal of Legal, Ethical and Regulatory Issues, 24(Special Issue 1), 1-11. https://doi.org/10.5281/zenodo.5507840
Imoniana, J. O., Feitas, E. C. D., & Perera, L. C. J. (2016). Assessment of internal control systems to curb corporate fraud - evidence from Brazil. African Journal of Accounting, Auditing, and Finance, 5(1), 1. https://doi.org/10.1504/ajaaf.2016.077592
Karim, Z. A., Said, J., & Bakri, H. H. M. (2015). An exploratory study on the possibility of assets misappropriation among royal Malaysian police officials. Procedia Economics and Finance, 31, 625–631. https://doi.org/10.1016/s2212-5671(15)01150-8
Khan, S. N. (2014). Qualitative research method - Phenomenology. Asian Social Science, 10, 298–310. https://doi.org/10.5539/ass.v10n21p298
Kramer, B. (2015). Trust, but verify: Fraud in small businesses. Journal of Small Business and Enterprise Development, 22(1), 4–20. https://doi.org/10.1108/jsbed-08-2012-0097
Law, M., & Kusant, R. (2014). An exploration of small business restaurants knowledge and skills to prevent fraud. Journal of Finance and Accountancy, 17(1), 1–15.
Laxman, S., Randles, R., & Nair, A. (2014). The fight against fraud. Internal Auditor, 71(1), 49–53.
Lokanan, M. E. (2015). Challenges to the fraud triangle: Questions on its usefulness. Accounting Forum, 39, 201–224. https://doi.org/10.1016/j.accfor.2015.05.002
Makrakis, V., & Kostoulos-Makrakis, N. (2016). Bridging the qualitative–quantitative divide: Experiences from conducting a mixed methods evaluation in the RUCAS programme. Evaluation and Program Planning, 54(1), 144–151. https://doi.org/10.1016/j.evalprogplan.2015.07.008
Mangala, D., & Kumari, P. (2015). Corporate fraud prevention and detection: revisiting the literature. Journal of Commerce and Accounting Research, 4(1), 52–62. https://doi.org/10.21863/jcar/2015.4.1.006
Mannay, D., & Morgan, M. (2015). Doing ethnography or applying a qualitative technique? Reflections from the waiting field. Qualitative Research, 15, 166–182. https://doi.org/10.1177/1468794113517391
Marshall, C., & Rossman, G. B. (2016). Designing qualitative research (6th ed.). Thousand Oaks, CA: Sage.
McMahon, R., Pence, D., Bressler, L., & Bressler, M. S. (2016). New tactics in fighting financial crimes: Moving beyond the fraud triangle. Journal of Legal, Ethical & Regulatory Issues, 19(1), 16–25.
Moorthy, M. K., Seetharaman, A., Jaffar, N., & Foong, Y. P. (2014). Employee perceptions of workplace theft behavior: A study among supermarket retail employees in Malaysia. Ethics & Behavior, 25(1), 61–85. https://doi.org/10.1080/10508422.2014.917416
Morales, J., Gendron, Y., & Guénin-Paracini, H. (2014). The construction of the risky individual and vigilant organization: A genealogy of the fraud triangle. Accounting, Organizations and Society, 39, 170–194. https://doi.org/10.1016/j.aos.2014.01.006
Moritz, S. (2016). Taking the best route to managing fraud and corruption risks. The EDP Auditing, Control, and Security, 53(3), 5–7. https://doi.org/10.1080/07366981.2016.1148997
Moss, J. M., Gibson, D. M., & Dollarhide, C. T. (2014). Professional identity development: A grounded theory of transformational tasks of counselors. Journal of Counseling and Development, 92(1), 3–12. https://doi.org/10.1002/j.1556-6676.2014.00124.x
Nia, S. H. (2015). Financial ratios between fraudulent and non-fraudulent firms: Evidence from Tehran stock exchange. Journal of Accounting and Taxation, 7(3), 38–44. https://doi.org/10.5897/JAT2014.0166
Olaison, L., & Meier Sørensen, B. (2014). The abject of entrepreneurship: Failure, fiasco, fraud. International Journal of Entrepreneurial Behavior & Research, 20, 193–211. https://doi.org/10.1108/ijebr-09-2013-0143
Omar, N., Johari, Z. A., & Hasnan, S. (2015). Corporate culture and the occurrence of financial statement fraud: A review of literature. Procedia Economics and Finance, 31, 367–372. https://doi.org/10.1016/s2212-5671(15)01211-3
Paschen, J.-A., & Ison, R. (2014). Narrative research in climate change adaptation: Exploring a complementary paradigm for research and governance. Research Policy, 43, 1083–1092. https://doi.org/10.1016/j.respol.2013.12.006
Peltier-Rivest, D., & Lanoue, N. (2015). Cutting fraud in Canadian organizations. Journal of Financial Crime, 22, 295–304. https://doi.org/10.1108/jfc-11-2013-0064
Rahman, R. A., & Anwar, I. S. K. (2014). Types of fraud among Islamic banks in Malaysia. International Journal of Trade, Economics and Finance, 5, 176–179. https://doi.org/10.7763/ijtef.2014.v5.365
Rendon, J. M., & Rendon, R. G. (2016). Procurement fraud in the US Department of Defense. Managerial Auditing Journal, 31, 748–767. https://doi.org/10.1108/maj-11-2015-1267
Robinson, O. C. (2014). Qualitative research in psychology sampling in interview-based qualitative research: A theoretical and practical guide. Qualitative Research in Psychology, 11(1), 37–41. https://doi.org/10.1080/14780887.2013.801543
Roden, D. M., Cox, S. R., & Joung-Yeon, K. (2016). The fraud triangle as a predictor of corporate fraud. Academy of Accounting & Financial Studies Journal, 20(1), 80–92.
Rodgers, W., Söderbom, A., & Guiral, A. (2014). Corporate social responsibility enhanced control systems reducing the likelihood of fraud. Journal of Business Ethics, 131, 871–882. https://doi.org/10.1007/s10551-014-2152-5
Rose, M., Sarjoo, P., & Bennett, K. (2015). A boost to fraud risk assessments. Internal Auditor, 72(3), 22–23.
Schuchter, A., & Levi, M. (2015). Beyond the fraud triangle: Swiss and Austrian elite fraudsters. Accounting Forum, 39, 176–187. https://doi.org/10.1016/j.accfor.2014.12.001
Singh, K., Best, P., & Mula, J. (2013). Automating vendor fraud detection in enterprise systems. The Journal of Digital Forensics, Security, and Law, 8(2), 7–42.
Sloan, C., Caudill, S. B., & Mixon, F. G. (2016). Entrepreneurship and crime: The case of new restaurant location decisions. Journal of Business Venturing Insights, 5(1), 19–26. https://doi.org/10.1016/j.jbvi.2015.12.003
Speziale, N. (2014). Does unemployment increase crime? Evidence from Italian provinces. Applied Economics Letters, 21, 1083–1089. https://doi.org/10.1080/13504851.2014.909568
Trompeter, G. M., Carpenter, T. D., Jones, K. L., & Riley, R. A. (2014). Insights for research and practice: What we learn about fraud from other disciplines. Accounting Horizons, 28, 769–804. https://doi.org/10.2308/acch-50816
Vaismoradi, M., Turunen, H., & Bondas, T. (2013). Content analysis and thematic analysis: Implications for conducting a qualitative descriptive study. Nursing & Health Science, 15, 398–405. https://doi.org/10.1111/nhs.12048
Vohra, V. (2014). Using the multiple case study design to decipher contextual leadership behaviors in Indian organizations. The Electronic Journal of Business Research Methods, 12(1), 54–65.
Whittaker, J. (2015). Undercover employer: Is it ever ok to put your staff under covert surveillance? Strategic HR Review, 14, 226–229. https://doi.org/10.1108/shr-09-2015-0071
Wilson, V. (2016). Research methods: Triangulation. Evidence Based Library and Information Practice, 11(1), 66–68. https://doi.org/10.18438/b86s5f
Yin, R. K. (2014). Case study research: Designs and methods (5th ed.). Thousand Oaks, CA: Sage.
--0--
